Environmental impacts of macroeconomic variables: A case study of Iran and selected OPEC members

Considering the undeniable importance of the environment in people’s lives, this study investigates the combined effects of information and communication technology (ICT) and foreign direct investment (FDI) on achieving environmental sustainability. With increasing carbon emissions and their destructive environmental, socioeconomic, and political consequences, the main research question is: what strategies have governments, especially oil-exporting countries, previously used to reduce pollution, and what policies do they plan to implement in the future? Among the policies undertaken by OPEC member countries, has FDI and the development of ICT been effective in preventing environmental damage? To address this, this study uses renewable energy consumption, ICT intensity, FDI, and urbanization as explanatory variables, with carbon dioxide (CO₂) emissions as the dependent variable. The analysis focuses on OPEC members from 2000 to 2020 using a panel vector autoregression (PVAR) method. The results indicate that a shock to FDI, labor force, urban population, and renewable energy consumption reduces CO₂ emissions while a shock to gross capital formation increases them. The impact of an ICT shock on CO₂ emissions is negligible. Variance analysis further shows that urban population, labor force, and FDI have the greatest influence on CO₂ behavior, therefore, it is necessary to attract more FDI to help reduce CO₂ in OPEC members.